ANTI-MONEY LAUNDERING LAWS APPLY TO CRYPTO TOO, SAYS FINCEN CHIEF

Last updated: June 19, 2025, 19:42 | Written by: Arthur Hayes

The rise of cryptocurrencies has brought with it a wave of innovation and opportunity, but also a corresponding increase in scrutiny from regulatory bodies.For those operating in the digital asset space, the message from the Financial Crimes Enforcement Network (FinCEN) is clear: Anti-Money Laundering (AML) laws apply to crypto too. This isn't just a suggestion; it's a firm declaration that traditional financial regulations are being extended to cover the burgeoning world of virtual currencies. Blanco seemed to direct his comments toward anonymous crypto payment systems that could conceal criminal activity and or enable users to anonymously engage in criminal behavior. The FinCEN head pointed in his speech to the key objective of AML policy, which is obtaining information about who is involved in a payment transaction, saying:FinCEN Director, in multiple public statements, has underscored the necessity of compliance, particularly for fintech firms providing anonymous services. FinCEN Director Kenneth Blanco says that the agency expects fintech firms that provide anonymous services to comply with Anti-Money Laundering standards. The United States Financial Crimes Enforcement Network (FinCEN) Director Kenneth Blanco spoke at the University of Georgetown where he made it clear that Anti-Money Laundering (AML) laws applyThese comments highlight a growing concern about the potential for cryptocurrencies to be used for illicit activities, including money laundering and the financing of terrorism.

This article will delve into the specifics of how AML regulations apply to the crypto industry, exploring the legal framework, practical implications, and the steps businesses need to take to ensure compliance.We'll examine real-world examples of enforcement actions, discuss the challenges of regulating decentralized finance (DeFi), and provide actionable guidance for navigating the complex landscape of cryptocurrency AML. Under FinCEN s Bank Secrecy Act/Anti-Money Laundering regulations, money transmitters and other money service businesses are required to develop anti-money laundering/countering the financing ofIgnoring these regulations is simply not an option – the stakes are too high, and the consequences can be severe.

Understanding the Bank Secrecy Act (BSA) and its Relevance to Crypto

The cornerstone of AML regulations in the United States is the Bank Secrecy Act (BSA). The United States Financial Crimes Enforcement Network (FinCEN) Director Kenneth Blanco spoke at the University of Georgetown where he made it clear that Anti-Money Laundering (AML) laws apply to everyone.Established originally in 2025, the BSA mandates that financial institutions assist the U.S. government in detecting and preventing money laundering. Kenneth Blanco, Direttore del Financial Crimes Enforcement Network (FinCEN) degli Stati Uniti, ha recentemente tenuto un discorso presso la University of Georgetown nel quale ha sottolineato che le norme antiriciclaggio si applicano indistintamente a tutti i business: anche le aziende operanti nel settore delle criptovalute devono rispettare leIt’s been amended and enhanced over the years to remain effective against evolving financial crimes. Anti-Money Laundering Laws Apply to Crypto Too, Says FinCEN Chief . Buy, Sell, Trade Bitcoin with Credit Card 100 Cryptocurrencies @ BEST rates from multiple sources, Wallet-to-Wallet, Non-Custodial!Critically, FinCEN interprets the BSA to apply to many businesses operating with cryptocurrencies.

The BSA’s key provisions for crypto businesses include:

Registration as a Money Services Business (MSB): Entities accepting and transmitting convertible virtual currency (CVC), essentially cryptocurrencies, may be classified as MSBs and must register with FinCEN.
Implementing an AML Program: MSBs must develop and maintain a comprehensive AML program, including policies, procedures, and internal controls.
Recordkeeping and Reporting: Detailed records of transactions must be kept, and certain transactions, like those exceeding $10,000, must be reported to FinCEN through Suspicious Activity Reports (SARs).
Customer Due Diligence (CDD): Identifying and verifying the identities of customers is a critical component of AML compliance.

It's important to understand that the BSA's definition of a financial institution is broad.It's not just banks that need to comply; cryptocurrency exchanges, wallet providers, and even certain DeFi platforms can fall under its scope.

Who is Considered a Money Services Business (MSB) in the Crypto Space?

Determining whether your crypto-related business qualifies as an MSB is crucial. Earlier this month, the Financial Crimes Enforcement Network (FinCEN) released new guidance to clarify when the Bank Secrecy Act (BSA) will apply to businesses that involve cryptocurrencies (what FinCEN refers to as convertible virtual currencies, or CVCs). The BSA imposes anti-money laundering obligations on various U.S. financial institutionsFinCEN defines MSBs based on the nature of their financial activities.Here are some common examples of crypto businesses that often fall under the MSB definition:

Cryptocurrency Exchanges: Platforms that facilitate the buying, selling, or exchange of cryptocurrencies for fiat currencies or other cryptocurrencies.
Virtual Currency Kiosks/ATMs: Machines that allow users to buy or sell cryptocurrencies for cash.
Peer-to-Peer Exchangers: Individuals or entities that regularly engage in buying or selling cryptocurrencies for profit.
Payment Processors: Businesses that process cryptocurrency payments on behalf of merchants.
Custodial Wallet Providers: Entities that hold and manage cryptocurrency on behalf of users.

It's important to note that even if a business operates primarily with cryptocurrencies, it can still be considered an MSB if it engages in activities that involve the transmission of funds. The BSA was established in 2025 and has become one of the most important tools in the fight against money laundering. Since then, numerous other laws have enhanced and amended the BSA to provide law enforcement and regulatory agencies with the most effective tools to combat money laundering. An index of anti-money laundering laws since 2025For instance, a company that provides cryptocurrency gaming services but also allows users to withdraw their winnings in fiat currency may need to register as an MSB.

Key Components of an AML Compliance Program for Crypto Businesses

Building a robust AML compliance program is essential for any crypto business subject to the BSA.A well-designed program should include the following components:

Designated AML Officer: Appoint a qualified individual to oversee the company’s AML compliance efforts.This person should have a thorough understanding of AML regulations and the specific risks associated with the business’s operations.
Written AML Policies and Procedures: Develop comprehensive policies and procedures that outline the company's approach to AML compliance.These policies should cover customer due diligence, transaction monitoring, recordkeeping, and reporting.
Customer Due Diligence (CDD) and Know Your Customer (KYC): Implement procedures to verify the identities of customers and assess their risk profiles. The United States Financial Crimes Enforcement Network (FinCEN) Director Kenneth Blanco spoke at the University of Georgetown where he made it clear that Anti-Money Laundering (AML) laws apply toThis includes collecting identifying information, such as name, address, and date of birth, and verifying that information against reliable sources. 26 Sunday January 2025. About; Advertise; Submit Press Release; Contact Us; News. Bitcoin News. Bitcoin News; Bitcoin Cash News; Bitcoin SV NewsEnhanced due diligence (EDD) should be conducted for high-risk customers, such as those located in high-risk jurisdictions or those engaging in suspicious activity.
Transaction Monitoring: Implement systems to monitor transactions for suspicious activity.This includes setting thresholds for transaction amounts, identifying unusual patterns of activity, and flagging transactions involving high-risk jurisdictions or individuals.
Suspicious Activity Reporting (SAR): Establish procedures for reporting suspicious activity to FinCEN. For example, in September 2025, FinCEN designated PM2BTC, a crypto-to-fiat exchange, as a primary money laundering concern, concurrently with OFAC sanctioning PM2BTC s operators and CryptexSARs should be filed promptly and accurately, providing detailed information about the suspicious activity and the individuals or entities involved.
Recordkeeping: Maintain accurate and complete records of all transactions and customer interactions.These records should be kept for at least five years and should be readily accessible to regulators.
Employee Training: Provide regular AML training to all employees, particularly those involved in customer onboarding, transaction processing, or compliance. WASHINGTON - In an effort to prevent money laundering and stop crypto-facilitated crime and sanctions violations, a leading group of U.S. Senators is introducing new, bipartisan legislation requiring decentralized finance (DeFi) services to meet the same anti-money laundering (AML) and economic sanctions compliance obligations as otherTraining should cover AML regulations, the company's AML policies and procedures, and how to identify and report suspicious activity.
Independent Testing: Conduct periodic independent testing of the AML program to ensure its effectiveness.This testing should be performed by a qualified third party or by an internal audit function with sufficient expertise.

It's crucial to remember that a ""one-size-fits-all"" approach to AML compliance is not effective. accepting and transmitting CVC are required, like any money transmitter, to register with FinCEN as MSBs and comply with anti-money laundering/countering the financing of terrorism (AML/CFT) program, recordkeeping, and reporting requirements. These requirements apply equally to domestic and foreign-located CVC money transmittersEach business should tailor its AML program to its specific risks and operational characteristics.

Challenges of AML Compliance in the Decentralized Finance (DeFi) Space

While the principles of AML compliance are clear, applying them to the decentralized finance (DeFi) space presents unique challenges.DeFi platforms often operate without central intermediaries, making it difficult to identify and verify the identities of users and monitor transactions.

Some of the key challenges include:

Lack of Centralized Control: DeFi platforms are often governed by decentralized autonomous organizations (DAOs), making it difficult to assign responsibility for AML compliance.
Anonymity and Pseudonymity: DeFi users often interact with platforms using pseudonymous or anonymous addresses, making it difficult to identify and verify their identities.
Cross-Border Transactions: DeFi platforms often facilitate cross-border transactions, making it difficult to track the flow of funds and identify suspicious activity.
Smart Contract Complexity: DeFi platforms are built on complex smart contracts, which can be difficult to audit and understand.

Despite these challenges, regulators are increasingly focusing on DeFi.Lawmakers are actively exploring ways to extend AML regulations to DeFi platforms, potentially requiring them to implement KYC/AML procedures and report suspicious activity.

Real-World Examples of FinCEN Enforcement Actions in the Crypto Industry

FinCEN has demonstrated its commitment to enforcing AML regulations in the crypto industry through a series of enforcement actions. Skip to main content Bitcoin Insider. MenuThese actions serve as a stark reminder of the consequences of non-compliance.

Some notable examples include:

Bitzlato Limited (January 2025): FinCEN identified Bitzlato, a virtual currency exchange, as a primary money laundering concern in connection with Russian illicit finance.
PM2BTC (September 2025): FinCEN designated PM2BTC, a crypto-to-fiat exchange, as a primary money laundering concern and simultaneously sanctioned its operators through the Office of Foreign Assets Control (OFAC).Cryptex was also sanctioned.

These enforcement actions highlight the types of activities that can attract regulatory scrutiny, including facilitating illicit transactions, failing to implement adequate AML controls, and operating in high-risk jurisdictions.The consequences can include significant financial penalties, asset forfeitures, and even criminal charges.

The Role of Technology in AML Compliance for Crypto

Technology plays a critical role in helping crypto businesses comply with AML regulations. Anti-Money Laundering Laws Apply to Crypto Too, Says FinCEN Chief cointelegraph.com 4 more, UTCAML compliance software can automate many of the tasks associated with AML compliance, such as customer due diligence, transaction monitoring, and suspicious activity reporting.

Some of the key features of AML compliance software include:

KYC/CDD Automation: Automates the process of collecting and verifying customer information.
Transaction Monitoring: Monitors transactions in real-time for suspicious activity.
Sanctions Screening: Screens customers and transactions against sanctions lists.
Regulatory Reporting: Generates reports required by regulators, such as SARs.
Blockchain Analytics: Provides insights into cryptocurrency transactions and addresses.

By leveraging technology, crypto businesses can streamline their AML compliance efforts, reduce the risk of human error, and improve their ability to detect and prevent money laundering.

Staying Updated on Evolving AML Regulations

The regulatory landscape for cryptocurrencies is constantly evolving, and it is crucial for businesses to stay informed of the latest developments.Here are some tips for staying updated:

Monitor FinCEN Guidance: Regularly review FinCEN guidance, including regulations, advisories, and interpretive rulings.
Follow Industry News: Stay abreast of industry news and developments related to AML compliance.
Attend Industry Events: Attend industry conferences and seminars to learn from experts and network with other professionals.
Consult with Legal Counsel: Seek legal advice from experienced attorneys specializing in cryptocurrency law and AML compliance.
Join Industry Associations: Consider joining industry associations that advocate for responsible regulation and provide compliance resources.

What happens if I don’t comply with AML regulations?

The consequences of non-compliance with AML regulations can be severe, ranging from hefty fines to criminal charges. On October 21, director of the Financial Crimes Enforcement Network (FinCEN), Kenneth Blanco, spoke at the University of Georgetown. During his speech, he stated that Fintech firms offering anonymity to cryptocurrency users would also be subject to anti-money laundering (AML) laws.FinCEN has a track record of aggressively pursuing entities that fail to meet their AML obligations.Beyond legal penalties, non-compliance can also lead to reputational damage, which can be particularly detrimental in the crypto industry where trust is paramount.

Are there different AML requirements for different types of crypto businesses?

Yes, the specific AML requirements can vary depending on the nature of the crypto business and its activities.For example, a cryptocurrency exchange that handles large volumes of transactions may be subject to more stringent requirements than a small peer-to-peer exchanger. The United States Financial Crimes Enforcement Network (FinCEN) Director Kenneth Blanco said that Anti-Money Laundering (AML) laws will be strictly enforced in the world of cryptocurrencies. OnIt's essential to conduct a thorough risk assessment to determine the specific AML obligations that apply to your business.

The Importance of a Risk-Based Approach to AML Compliance

FinCEN emphasizes a risk-based approach to AML compliance.This means that businesses should tailor their AML programs to the specific risks they face, taking into account factors such as the types of customers they serve, the products and services they offer, and the jurisdictions in which they operate.

A risk-based approach involves:

Identifying and Assessing Risks: Identifying the specific AML risks that the business faces and assessing the likelihood and potential impact of those risks.
Developing Mitigation Strategies: Developing and implementing strategies to mitigate the identified risks.
Monitoring and Reviewing: Regularly monitoring and reviewing the effectiveness of the mitigation strategies and making adjustments as needed.

By taking a risk-based approach, businesses can focus their resources on the areas where they are most vulnerable to money laundering and terrorist financing.

The Future of AML Regulation in the Crypto Industry

The future of AML regulation in the crypto industry is likely to involve greater international cooperation and harmonization of regulations. Anti-Money Laundering (AML) regulations are essential in the cryptocurrency industry to prevent financial crimes such as money laundering and terrorist financing. This guide explores how AML applies to crypto, outlining key regulations, risks, and real-world examples to ensure compliance.As cryptocurrencies become more widely adopted, regulators around the world are working together to develop consistent standards for AML compliance.

Some of the key trends to watch include:

Increased Focus on DeFi: Regulators are likely to increase their focus on DeFi platforms, seeking to bring them under the scope of AML regulations.
Greater Use of Technology: Technology will play an increasingly important role in AML compliance, with the development of new tools and techniques for monitoring and detecting illicit activity.
Enhanced International Cooperation: Regulators will continue to cooperate internationally to combat cross-border money laundering and terrorist financing.
Focus on Virtual Asset Service Providers (VASPs): Expect increased scrutiny and regulation of Virtual Asset Service Providers (VASPs) to ensure compliance with AML standards.

As the crypto industry matures, it is essential for businesses to embrace AML compliance as a core business function. Anti-Money Laundering Laws Apply to Crypto Too, Says FinCEN ChiefBy proactively implementing robust AML programs, businesses can protect themselves from legal and reputational risks and contribute to a safer and more transparent financial system.

Conclusion: Embracing AML Compliance in the Crypto Ecosystem

The message from FinCEN Director is unmistakable: Anti-Money Laundering laws apply to crypto too. Ignoring this reality is not an option for businesses operating in the digital asset space.By understanding the BSA, implementing robust AML compliance programs, and staying updated on evolving regulations, crypto businesses can mitigate their risks and contribute to a more secure financial ecosystem. NEW YORK The U.S. government will strictly enforce a rule that requires cryptocurrency firms engaged in money service businesses such as digital asset exchangesThe stakes are high, with potential penalties including hefty fines, asset forfeitures, and even criminal charges.As the crypto industry matures, embracing AML compliance is not just a legal requirement; it’s a critical step towards building trust and fostering long-term sustainability.

Take action now to ensure your business is compliant. 雖然 FinCEN 對加密貨幣的態度相當嚴厲，但他們似乎仍舊看好區塊鏈技術的潛力；上月底，FinCEN 就在美國國會的指示下，著手研究區塊鏈技術，望能在日後用於打擊金融犯罪。延伸閱讀美國眾議院通過法案，要求金融犯罪防治署 FinCEN「研究」區塊鏈? 相關報導?Consult with legal counsel specializing in cryptocurrency law, invest in AML compliance technology, and provide comprehensive training to your employees.By taking these steps, you can protect your business and contribute to a safer and more transparent crypto industry.